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MARKET REVIEWS. European stock markets are falling on Thursday, cooled by the decision of the Federal Reserve (Fed) to reduce its interest rates less this year, despite the deceleration of inflation in the United States.
Stock Market Indices at 7:45 a.m.
London, Frankfurt And Paris fell by 0.3% to 0.5% at the start of the session in Europe.
In New York, before the markets opened, the average Dow Jones Industrial stocks slipped 0.3% and the broader S&P 500 index added 0.1%.
In Asia, the Nikkei 225 lost 0.4% in Tokyo. The scholarship of Shanghai fell by 0.3% and the Hang Seng took almost 1% in Hong Kong. Sydney added 0.4% and Seoul jumped 1%.
On the New York Commodity Exchange, the price of oil dropped 21 US cents to US$78.29 per barrel.
In the currency market, the Canadian dollar was trading at 72.99 US cents on Wednesday, up from 72.64 US cents on Tuesday.
The context
On Wednesday evening, the Fed unsurprisingly announced that it would leave its key rates unchanged, in the range of 5.25% to 5.50% in which they have been since last July, at the highest level in more than 20 years.
Members of the Fed’s Monetary Committee (FOMC) now expect only one cut this year, compared to three previously.
“All investors’ eyes were not directed towards maintaining rates, but rather towards the new forecasts” of rate cuts, comments John Plassard, investment specialist for Mirabaud.
Especially since the ECB, which has already lowered these rates once this month, “will not be able to align three rate cuts if the Fed has not aligned just one,” noted Alexandre Baradez, of IG France .
This news was therefore poorly received, despite a better than expected report on American inflation, which helped bring Wall Street to records the day before.
The CPI index in fact revealed inflation in May at 3.3% over one year compared to 3.4% in April. So-called core inflation, which excludes volatile food and energy data, is also evolving more favorably than expected, at 0.2% over one month compared to 0.3% in April, and at 3 .4% versus 3.7%, over one year.
John Plassard also underlines that the Fed has revised upwards its “inflation estimates for 2024, 2025 and 2026”, which could lead investors “to take profits on the indices (at the highest) in the coming days “.
Enough to put Wall Street on the path to an opening without clear direction: the Dow Jones futures contract fell by 0.30%, that of the Nasdaq took 0.63%, while that of the S&P 500 was closer to the balance (+0.14%).
On the bond market, the yield on two-year US government bonds, the most sensitive to changes in the Fed’s monetary policy, stood at 4.76%, compared to 4.75% the day before at close. . Ten-year rates remained stable at 4.32%.
The car goes to the checkout
In Europe, the automotive sector was sinking on Thursday after the announcement that Brussels announced the day before up to 38% additional customs duties on imports of Chinese electric vehicles into the EU.
Germany, very involved in China, fought with Sweden and Hungary to avoid sanctions, fearing reprisals. France and Spain, on the contrary, pushed for targeted and proportionate measures.
On the Frankfurt Stock Exchange, Volkswagenthe leading European automobile group, dropped 3.38% and its luxury subsidiary Porsche 3.34%. Mercedes fell by 1.53% and BMW of 1.88%. For the three German groups, China is the main national market, representing up to 36% of sales volume.
In Paris, Renault dropped 2.54% and Stellantis lost 2.51%.
Volvo Carsowned by Chinese automobile giant Geely, even fell by 6.20%.
Oil down
Oil prices are trending downward, further penalized by the unexpected jump in American stocks published in a report the day before as well as by the firm speech of the Fed, still concerned about inflation.
The price of a barrel of North Sea Brent for delivery in August fell 0.53%, to US$82.16. The barrel of West Texas Intermediate (WTI) American, due in July, fell 0.64%, to US$78.00.
In the foreign exchange market, the American dollar was down slightly (-0.12%) compared to the euroat US$1.079 per euro.
THE bitcoin lost 0.26% to US$67,905.
